The traditional Franco-German economic motor has been disappointing the rest of the EU with anaemic growth for years. A look at the French partner reveals a country facing some very similar problems to those in Germany.
France and Germany are both in the economic doldrums
After handing a brusque 'non!' to the EU constitutional contract in a referendum in May, France is a bitterly polarized country. Two camps have formed which fundamentally differ on France's role within the EU as well as the proper direction for France's domestic labor laws.
One the one side are those inside the existing system with secure jobs and excellent benefits, who naturally want to maintain the status quo. On the other side are job-seekers and business leaders who say that France can only survive by changing its social model and becoming more internationally competitive.
Tough times for small busi n esses
Leon Cohen runs a fruit stand near here
Leon Cohen, a Parisian fruit and vegetable seller who maintains a stand at a street market near the Eiffel Tower, said the business climate in France is awful. In the past 30 years, he has seen costs of living skyrocket in relation to his earnings.
Though he works long hours, most of his countrymen simply don't put in enough hours, Cohen said. There's something rotten with a system in which those working a state-mandated 35-hour week earn more than he does.
"I earned more money 30 years ago than I do today," he said. "All the people who don't do anything are supported by those of us who work, especially the small businessmen like myself."
The majority of French who voted against the EU constitution in May felt they were saving France from cutthroat, Anglo-Saxon capitalism and protecting small businesses like the fruit stand run by Leon Cohen. But is this really what they were doing?
Usi n g humor to educate about eco n omics
"We are living today in a state of global economic warfare," said French Congressman Jean-Michel Fourgous. "France can no longer afford to have sterile debates questioning capitalism and globalization. These debates are absolutely absurd."
Fourgous is working with a comedian to produce a video parodying French work habits. With it he hopes to educate the large numbers of French citizens who just don't understand economics, he said.
Fourgous divides the French population into the half that works and produces wealth, and the half that holds the country back. Large companies like Michelin, Danone and L'Oreal, as well as small businessman like Leon Cohen are all contributing to France's productivity. The other half is not.
"There are two Frances: commercial France and administrative France," Fourgous said. "The problem is they don't have the same value systems or understand each other. The problem is that administrative France, which is a total failure, wants to make the laws and run the companies. This just can't go on."
The freedom to hire a n d fire
What is becoming increasingly clear is that the comfortable labor policies which make France an enviable place to hold a job are not tenable in a globalized world. The labor market's rigidity is well known to hurt France's international competitiveness. Fortunately, people in France are starting to get serious about flexibility.
French Prime Minister Dominique de Villepin is poised to lead France
The new French prime minister, Dominique de Villepin, widely considered to be part of "administrative France," has taken a bold move. To stimulate job growth he passed a law which allows small companies to fire employees more easily. Villepin passed the law by decree, bypassing the French parliament, a very controversial move.
France's business community and those looking for work in a dismal job market are delighted, but the other France is peeved. It may be one small step in the right direction for improving France's international standing as a business location, but it will surely be facing the wrath of the other France this fall.